“As in past years, the city’s budget this year continues to raid water and sewer funds to mask its General Fund deficit. This is in direct violation of Proposition 218—and a violation of the trust water and sewer fund ratepayers should have in the city. The two reforms we propose today would put transparency and integrity back into the city’s water and sewer funds,” noted Carl DeMaio, President of the Performance Institute. DeMaio is leading a review of the city’s budget and management practices.

Analysis conducted by the Institute of the water and wastewater budgets has identified a number of areas where the city has been raiding these funds. The two reforms proposed by the Institute would restore transparency and integrity to the funds.

Independent Audit and Citizens’ Task Force Review
The city used an independent “cost of service” audit to readjust the schedule of rates for water. Using a similar approach, the Institute is proposing a citizens’ task force be established to oversee a complete audit of any and all transfers of funds and activities between the General Fund and the city’s Enterprise and Special Funds. This audit would include the water and sewer funds. The audit would examine “full cost of service” provided by General Fund departments to Enterprise and Special Fund departments to ensure that reimbursements are appropriate. Additionally, the audit would examine all city personnel supported by Enterprise or Special Funds to ensure that their actual job responsibilities involve activities that fall within the appropriate use of those funds.

Council Policy on Eliminating “Right-of-Way” Fees in FY 2006
The city’s budget once again imposes an arbitrary “Right of Way” fee of $2.3 million on water and sewer lines for running under city property. Taxpayer groups for years have fought these fees, and secured a commitment from the previous Mayor and Council to phase these fees out in the late 1990s. That phase out was stopped during Mayor Dick Murphy’s first budget. Last month, the state and city struck a deal whereby raids on local government finances would be phased out after two years. Using a similar approach, the Institute proposes that the Council pass an ordinance today that would prohibit the imposition of “Right of Way” fees past FY 2005.

Based here in San Diego, the Institute is a national government reform think tank that promotes the principles of performance, transparency, competition and accountability in government. Additional information on the San Diego Citizens’ Budget Project can be found at www.sandiegobudget.org.

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